According to data from Calastone, more than £3.6 billion flowed out of equity funds over the past three months, including £1.2 billion withdrawn in September alone. The firm’s Fund Flow Index described investors as spooked by “sky-high stock markets.”
Despite these outflows, the FTSE 100 and S&P 500 both hit new record highs last week, even as global markets grappled with uncertainty fuelled by Donald Trump’s tariff campaign. Enthusiasm for artificial intelligence continues to drive share prices higher — particularly in the US, where AMD shares surged 24% on Monday following news of a chip supply deal with OpenAI.
Edward Glyn, head of global markets at Calastone, called the trend “really unusual,” noting that it’s rare to see record-breaking markets while investors are “moving decisively for the exits across such a broad range of funds.” He added that a sustained period of net selling is “noteworthy” given the long-term bias toward inflows as people save for the future.
Global equity funds experienced their fourth consecutive month of net selling, with outflows of £203 million, while UK-focused funds performed even worse, shedding £692 million.
The main beneficiaries were bond and money market funds, which attracted £895 million as investors sought safer havens amid market uncertainty.
Glyn said UK-focused funds continue to lose capital, although selling had been “more muted” in recent months before picking up again. “Seeing the UK market reach record levels while still not looking expensive has given some sellers pause for thought,” he said. “But the doom loop of negative commentary on the UK economy — with its weak fiscal position, widening credit spreads, low growth, and looming tax rises — may now be winning out.”
In contrast, European equity funds bucked the global trend with modest inflows, despite recent political turmoil in France. The country’s new prime minister, Sébastien Lecornu, who had only recently taken office, resigned on Monday after less than a month, sending French stocks lower and bond yields higher.
